There's been a lot of talk over the last two days regarding the sharp rise in short interest as of mid-March. Since the end of February, short sales on the New York Stock Exchange increased by 10.7% from 14.6 billion shares to 16.2 billion shares. At face value, this is an amazing statistic given that the market had a decent rally over that same time period. Usually, when the market rallies, short interest declines.

If we dig into the short interest figures for individual stocks, however, we find that nearly half of the increase in total short interest came from Citigroup (NYSE:C), which saw its short interest rise from 203 million to 999 million shares following the government intervention which caused an arbitrage between the preferred and common stock. If we back out short interest figures for Citigroup (C), which is a stock that many would argue shouldn't even be listed, short interest would have only risen by about 5.3%.